Vertex Energy Inc (VTNR) 2024 Q1 法說會逐字稿

Hello, everyone, and welcome to Vertex Energy Incorporated first-quarter 2024 earnings conference call. Please note that this call is being recorded. (Operator instructions)

大家好，歡迎參加祥峰能源公司 2024 年第一季財報電話會議。請注意，此通話正在錄音。（操作員說明）

Thank you. I'd like to turn the call over to Chris Delange, Investor Relations Coordinator. You may now begin the conference.

謝謝。我想將電話轉給投資者關係協調員 Chris Delange。您現在可以開始會議了。

Thank you, operator. Good morning, everyone, and welcome to Vertex Energy's first-quarter 2024 conference call. On the call today are Chairman and CEO, Ben Cowart; Chief Financial Officer, Chris Carlson; Chief Operating Officer, James Rhame; Chief Strategy Officer, Alvaro Ruiz; and Chief Commercial Officer, Doug Haugh.

謝謝你，接線生。大家早安，歡迎參加祥峰能源 2024 年第一季電話會議。今天參加電話會議的是董事長兼執行長 Ben Cowart；財務長克里斯卡爾森；營運長詹姆斯·雷姆；首席策略長阿爾瓦羅·魯伊斯；首席商務官道格‧豪 (Doug Haugh)。

I want to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the risk factors that could cause actual results to differ, please refer to the Risk Factors section of Vertex Energy's latest annual and quarterly filings with the SEC. Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during our call and in the press release issued today.

我想提醒您，管理層在今天的電話會議上的評論和對問題的回答可能包括前瞻性陳述，這些陳述本質上是不確定的，超出了公司的控制範圍。儘管這些前瞻性陳述是基於管理階層目前的預期和信念，但實際結果可能存在重大差異。有關可能導致實際結果不同的一些風險因素的討論，請參閱 Vertex Energy 向 SEC 提交的最新年度和季度文件的風險因素部分。此外，請注意，您可以在我們的電話會議和今天發布的新聞稿中找到歷史上非公認會計準則財務指標的調整表。

Today's call will begin with remarks from Ben Cowart, followed by an operational review from James Rhame, financial review from Chris Carlson, and review of our commercial strategy by Doug Haugh. at the conclusion of these prepared remarks, we will open the line for questions.

今天的電話會議首先由 Ben Cowart 發表講話，隨後由 James Rame 進行營運審查，由 Chris Carlson 進行財務審查，最後由 Doug Haugh 對我們的商業策略進行審查。在這些準備好的發言結束後，我們將開始提問。

With that, I'll turn the call over to Ben.

這樣，我就把電話轉給本。

Thank you, Chris, and good morning to those joining us on the call today. We had better than expected operational results as we maintained our commitment to operating safely and reliably. From a financial perspective, the first quarter saw significant improvements supported by improved crack spreads. We generated almost $20 million in adjusted EBITDA, an increase of over $50 million quarter over quarter. Additionally, we saw conventional throughput above our guidance and managed direct operating costs and capital expenditures below our guidance.

謝謝克里斯，今天參加我們電話會議的人們早安。我們恪守安全可靠營運的承諾，取得了好於預期的營運表現。從財務角度來看，第一季在裂解價差改善的支持下出現了顯著改善。我們產生了近 2000 萬美元的調整後 EBITDA，環比成長超過 5000 萬美元。此外，我們看到傳統吞吐量高於我們的指導，而直接營運成本和資本支出則低於我們的指導。

Over the past few years, we have made material advancements and strategic decisions to grow Vertex. For the past two years we have operated safely and reliably while investing capital into upgrading the Mobile Refinery. We built in flexibility in our capital spend to allow us to redeploy our renewable equipment back into conventional production if our strategy required adjustment. Due to the significant macroeconomic headwinds for renewables over the past 12 months, many of which we believe will continue to occur over the next 18 months and beyond, we have decided to strategically pause our renewable diesel business and pivot to producing conventional fuels from the hydrocracker unit.

在過去的幾年裡，我們為發展 Vertex 取得了重大進展和策略決策。過去兩年來，我們在投資升級行動煉油廠的同時，安全可靠地運作。我們在資本支出方面建立了靈活性，以便在我們的策略需要調整時將再生設備重新部署回傳統生產。由於過去12 個月再生能源面臨重大宏觀經濟阻力，我們認為其中許多阻力將在未來18 個月及以後繼續出現，因此我們決定策略性暫停我們的再生柴油業務，轉而利用加氫裂解裝置生產傳統燃料單元。

We plan to reconfigure the hydrocracker in conjunction with a planned turnaround on the unit. When modeling the unit in conventional service against first-quarter 2024 historical data, we estimate the unit could have significantly improved our results, providing an additional fuel gross margin contribution of roughly $40 million on conventional fuels.

我們計劃結合裝置的計畫檢修來重新配置加氫裂解裝置。當根據 2024 年第一季的歷史數據對傳統服務中的裝置進行建模時，我們估計該裝置可以顯著改善我們的業績，為傳統燃料提供約 4000 萬美元的額外燃料毛利率貢獻。

On the call today, the team and I plan to update you on the financial and operating results for the first quarter of 2024 and go into our plans around the renewable business pause and pivot. I want to start by thanking my team, all the employees listening on the call today for the good work they have accomplished thus far in 2024.

在今天的電話會議上，我和我的團隊計劃向您介紹 2024 年第一季度的財務和營運業績的最新情況，並討論我們圍繞可再生能源業務暫停和轉型的計劃。首先，我要感謝我的團隊以及今天收聽電話會議的所有員工，感謝他們在 2024 年迄今所完成的出色工作。

As James will note shortly, our safety track record is commendable, and we have more work ahead of us to convert to all conventional feedstock, which we want to do safely because our people are our most valuable asset.

正如詹姆斯很快就會指出的那樣，我們的安全記錄值得稱讚，我們還有更多的工作要做，以轉換為所有傳統原料，我們希望安全地進行，因為我們的員工是我們最寶貴的資產。

With that, I'll now hand the call over to James.

現在，我將把電話轉給詹姆斯。

Thank you, Ben. Good morning, everyone. We continue to believe that our people and their safety are of the utmost importance, which is why I like to start talking about our health safety and environmental performance. We're proud to say that in the first quarter of 2024 was another clean quarter with zero OSHA recordable injuries. In fact, we've now operated for two years at the Mobile site without a recordable injury. We did have one minor environmental non-compliance at the Mobile site associated with the planned small unit turnaround executed during the first quarter. Additionally, Mobile saw zero process safety events, continuing its streak of outstanding HSE performance at the site. I want to commend our employees at every location for continually prioritizing the safety-first mentality of our entire organization.

謝謝你，本。大家，早安。我們仍然相信我們的人民及其安全至關重要，這就是為什麼我喜歡開始談論我們的健康安全和環境表現。我們很自豪地說，2024 年第一季又是一個乾淨的季度，OSHA 可記錄傷害為零。事實上，我們已經在莫比爾站點運營了兩年，沒有發生任何可記錄的傷害。我們的莫比爾工廠確實存在與第一季執行的計劃小單位週轉相關的輕微環境違規行為。此外，莫比爾的製程安全事件為零，繼續保持現場 HSE 表現出色的勢頭。我要讚揚我們各地的員工，他們總是將整個組織的安全第一心態放在首位。

The effort and care for each other seen across the entire business is a testament to the dedication of both employees and contract partners working within our facility. Our legacy operations overall had a good quarter with Marrero performing better than budget on volume and margin. This is an accomplishment of continuous improvement in operating performance by the Marrero team.

整個企業的努力和相互關懷證明了我們工廠內工作的員工和合約合作夥伴的奉獻精神。我們的傳統業務整體上季度表現良好，Marrero 在銷售和利潤方面的表現均優於預算。這是Marrero團隊持續改善營運績效的成果。

Our team at the Mobile site demonstrated strong operational performance at the conventional facility during the quarter with average throughput volumes of 64,065 barrels per day for capacity utilization of 85%, which was above the high end of our guidance of 63,000 barrels per day. The higher volumes compared to guidance are primarily due to stronger capacity utilization and getting accrued unit back from cleaning ahead of schedule.

本季度，我們莫比爾基地的團隊在傳統設施上展示了強勁的營運績效，平均吞吐量為每天 64,065 桶，產能利用率為 85%，高於我們每天 63,000 桶的指導上限。與指導相比，產量增加主要是由於產能利用率提高以及提前從清潔中恢復了應計單位。

Total OpEx per barrel for the first quarter was also below the low end of our prior guidance at $4.10 per barrel and reflects the increasing cost efficiency gained from smooth operations, which more than offset the inflationary impact of lower throughput volumes on a cost per barrel basis. Our conventional fuels gross margin per barrel during the quarter rose significantly to $12.63 compared to $4.79 in the fourth quarter. Our finished products such as gasoline, diesel, and jet fuel accounted for 64% of our total product yield during the first quarter of 2024 in line with our previous guidance.

第一季每桶總營運支出也低於我們先前指引的下限（每桶 4.10 美元），反映出平穩營運帶來的成本效率不斷提高，足以抵銷每桶成本較低吞吐量帶來的通膨影響。本季我們的傳統燃料每桶毛利率大幅上升至 12.63 美元，而第四季為 4.79 美元。2024 年第一季度，我們的汽油、柴油和航空燃油等成品占我們總產品產量的 64%，與我們先前的指導一致。

In the first quarter, we had a planned small turnaround of one of the reformers and a pit stop of the number one crew unit in March. Following these successful maintenance events in March, the Mobile facility is poised to operate at full rates during the second and third quarters, coincided with an expected rise in demand over the driving season.

在第一季度，我們計劃對其中一個改革者進行小幅調整，並在三月對第一號機組進行進站。繼三月這些成功的維護活動之後，莫比爾工廠準備在第二季和第三季全速運營，同時預計駕駛季節的需求也會增加。

Now, turning to our renewable fuels business. Vertex renewable diesel plant operated smoothly, generating total renewable fuels gross margin per barrel at $10.29 for the quarter. Our renewables throughput volumes average 4,090 barrels per day for a capacity utilization of 51%, in line with our recently updated guidance.

現在，轉向我們的再生燃料業務。Vertex 再生柴油工廠運作順利，本季每桶再生燃料總毛利率為 10.29 美元。根據我們最近更新的指導，我們的再生能源吞吐量平均為每天 4,090 桶，產能利用率為 51%。

During the second quarter of 2024, in line with our pause and pivot strategy, we are pausing renewables fuels production and redirecting the hydrocracking unit to conventional fuels and products. We had a previously planned catalyst and maintenance turnaround scheduled again later this year for our renewables business. We will now use the planned turnaround to load a conventional catalyst and transition the unit back to conventional fuel service. This hydrocracker unit is one of the most valuable physical assets, and we have retained the full optionality of this unit through engineering efforts in conjunction with the additional capital investments made.

2024 年第二季度，根據我們的暫停和轉型策略，我們將暫停再生燃料生產，並將加氫裂解裝置轉向傳統燃料和產品。我們先前計劃的催化劑和維護週轉計劃將在今年稍後再次針對我們的再生能源業務進行。我們現在將利用計劃的周轉來裝載傳統催化劑並將裝置轉換回傳統燃料服務。此加氫裂解裝置是最有價值的實體資產之一，我們透過工程工作以及額外的資本投資保留了裝置的全部選擇性。

There will be a transition period as we can reconfigure the unit and prepare it to run conventional feedstock. We are targeting startup conventional service prior to the end of the year. Following the unit startup, we expect to utilize it to further refine our existing VGO stream to an upgraded conventional product. We are optimistic that the timing of the unit coming on stream will benefit from seasonal market shifts where typically gasoline prices dip during the winter while deals diesel season premium due to increased heating level demand. We'll continue to watch closely as we work through this process.

將有一個過渡期，因為我們可以重新配置裝置並準備其運行傳統原料。我們的目標是在今年年底前啟動傳統服務。裝置啟動後，我們希望利用它進一步完善我們現有的 VGO 串流，將其升級為升級的傳統產品。我們樂觀地認為，該裝置投產的時間將受益於季節性市場變化，通常汽油價格在冬季下降，而柴油價格由於供暖水平需求增加而在季節溢價。我們將繼續密切關注這一過程。

I will now turn the call over to Chief Financial Officer, Chris Carlson, for a review of the company's financial results and additional detail regarding our financial and operating outlook for the second quarter 2024.

我現在將把電話轉給財務長 Chris Carlson，以審查公司的財務業績以及有關 2024 年第二季財務和營運前景的更多詳細資訊。

Thank you, James, and welcome to those joining us on the call today. Our focus continues to be on managing our balance sheet and liquidity. As Ben and James have outlined, our strategic decision to pause and pivot RD production is aimed at significantly enhancing this effort over the near term by stopping losses associated with renewable diesel production and adding available margin through upgrading VGO to a higher margin conventional product. We anticipate based on near and midterm macro pricing that we will be able to materially generate additional cash flow, allowing us greater financial flexibility and improving our balance sheet.

謝謝你，詹姆斯，並歡迎今天加入我們電話會議的人們。我們的重點仍然是管理我們的資產負債表和流動性。正如Ben 和James 所概述的，我們暫停和轉向RD 生產的戰略決定旨在通過阻止與可再生柴油生產相關的損失並通過將VGO 升級為利潤率更高的傳統產品來增加可用利潤，從而在短期內顯著加強這項努力。我們預計，根據近期和中期的宏觀定價，我們將能夠實質地產生額外的現金流，從而使我們擁有更大的財務靈活性並改善我們的資產負債表。

Turning now to our financial results. We were very pleased to see improvement across the board driven by stronger crack spreads. Vertex reported net loss attributable to the company of $17.7 million for the first quarter of 2024. This compares to a net loss of $63.9 million in the fourth quarter of 2023. We saw a $53 million improvement in our total adjusted EBITDA from a loss of $35.1 million in the fourth quarter to $18.6 million for the first quarter of 2024.

現在轉向我們的財務表現。我們很高興看到裂痕價差走強推動了全面改善。Vertex 報告 2024 年第一季公司淨虧損為 1,770 萬美元。相較之下，2023 年第四季淨虧損 6,390 萬美元。2024 年第一季度，我們的調整後 EBITDA 總額改善了 5,300 萬美元，從第四季的虧損 3,510 萬美元增至 1,860 萬美元。

During the quarter, we incurred a $15 million impact in cash flows, mostly as a result of the CapEx of $15 million spent during the quarter. We saw a decrease in cash from operating activities offset by an increase in financing activities. Total capital expenditures for the first quarter 2024 were $15 million, 29% below our prior guidance issued on February 28, reflecting a deliberate preservation of capital achieved via a deferral of certain discretionary capital expenditures. This primarily includes a realignment of planned capital expense for the renewables business.

本季度，我們的現金流受到了 1500 萬美元的影響，主要是由於本季度花費了 1500 萬美元的資本支出。我們看到營業活動現金的減少被融資活動的增加所抵銷。2024 年第一季的資本支出總額為 1500 萬美元，比我們 2 月 28 日發布的先前指引低 29%，反映了透過推遲某些可自由支配的資本支出來有意保留資本。這主要包括重新調整再生能源業務的計劃資本支出。

Turning to the balance sheet. As of March 31, 2024, the company had total cash and equivalents, including restricted cash of $65.7 million and total net debt outstanding of $218.5 million at the end of the first quarter 2024, including lease obligations of $68.1 million. We continuously monitor current market conditions and assess our expected cash generation and liquidity needs using the current forward crack spreads available.

轉向資產負債表。截至2024 年3 月31 日，該公司擁有現金和等價物總額，包括6,570 萬美元的限制性現金，截至2024 年第一季末的未償淨債務總額為2.185 億美元，其中包括6,810 萬美元的租賃義務。我們持續監控目前的市場狀況，並使用目前可用的遠期裂解價差評估我們的預期現金產生和流動性需求。

Weakening crack spreads indicate a continued need for proactively managing our liquidity position. As I stated, we believe that our strategic redirection for renewables will help our financial position. Given current market conditions, we are pursuing strategic financing opportunities to improve our balance sheet.

裂解價差的疲軟表明我們需要繼續主動管理我們的流動性部位。正如我所說，我們相信我們對再生能源的策略調整將有助於我們的財務狀況。鑑於當前的市場狀況，我們正在尋求策略性融資機會以改善我們的資產負債表。

Looking to the second quarter of 2024, we anticipate total conventional throughput volumes at Mobile to be between 68,000 and 72,000 barrels per day. Our expected yield of conventional products is expected to consist of between 64% to 68% high-value finished products such as gasoline, diesel, and jet fuel with the balance in intermediate and other products such as VGO.

展望 2024 年第二季度，我們預計莫比爾的常規總吞吐量將在每天 68,000 至 72,000 桶之間。我們的傳統產品預期產量預計將包括 64% 至 68% 的高價值成品，如汽油、柴油和噴射燃料，其餘為中間產品和其他產品，如 VGO。

On the renewable side of the business, we are running our remaining inventories of renewable feedstock, which we believe will improve our working capital and margins for the second quarter. Once the renewable feedstock is diminished, we will use previously planned catalyst and maintenance turnarounds scheduled for 2024 to load conventional catalyst and bring the unit out of turnaround into conventional service. The total cost of about $10 million was previously budgeted as part of the planned catalyst and maintenance turnaround and does not represent a material change to our forecasted capital spending.

在業務的可再生能源方面，我們正在運行剩餘的可再生原料庫存，我們相信這將改善我們第二季的營運資金和利潤。一旦可再生原料減少，我們將使用先前計劃的催化劑和定於 2024 年進行的維護檢修來裝載傳統催化劑，並使裝置從檢修狀態轉入常規服務。約 1000 萬美元的總成本之前已作為計劃催化劑和維護週轉的一部分進行了預算，並不代表我們預測的資本支出發生重大變化。

Anticipated OpEx per barrel, encompassing both conventional and renewables businesses on a fully consolidated basis, is projected to range between $4.11 and $4.46 for the quarter. We anticipate total capital expenditures for the second quarter to be between $20 million to $25 million, which includes a portion of the $10 million conversion cost.

本季預計每桶營運支出（涵蓋完全合併的傳統能源和再生能源業務）範圍在 4.11 美元至 4.46 美元之間。我們預計第二季的總資本支出將在 2,000 萬美元至 2,500 萬美元之間，其中包括 1,000 萬美元轉換成本的一部分。

I'd now like to turn the call to Chief Commercial Officer, Doug Haugh.

我現在想將電話轉給首席商務官 Doug Haugh。

Thanks, Chris. As Ben and James shared earlier, we're planning to pause renewables production, optimizing our hydrocracking asset to be utilized in upgrading conventional products. Our team has done an incredible job in terms of running and managing the unit in renewable service. I'm exceptionally proud of the work they achieved in building a supply base and securing approvals for lower carbon intensity pathways. The work done on developing these feedstock pathways not only deepens the proven capabilities of the asset in renewable service, but it also paves the way for potential future benefit should market conditions support a decision to resume renewables production.

謝謝，克里斯。正如本和詹姆斯早些時候分享的那樣，我們計劃暫停再生能源生產，優化我們的加氫裂解資產，用於升級傳統產品。我們的團隊在運作和管理再生能源服務單位方面做得非常出色。我對他們在建立供應基地和獲得低碳強度途徑批准方面所取得的成就感到非常自豪。開發這些原料途徑所做的工作不僅加深了資產在再生能源服務中的成熟能力，而且如果市場條件支持恢復再生能源生產的決定，也為未來潛在的利益鋪平了道路。

Our commercial team has now shifted its focus to supporting this strategic pivot, fulfilling our current renewable commercial obligations, winding down feedstock positions, and supporting our operational team on the ground. We continue to work closely with customers and suppliers, all of them have been great partners through this process. We're appreciative of their collaboration and support of this effort.

我們的商業團隊現在已將重點轉向支援此策略支點，履行我們目前的再生商業義務，減少原料部位，並支援我們的現場營運團隊。我們繼續與客戶和供應商密切合作，在這個過程中他們都成為了很好的合作夥伴。我們感謝他們對這項工作的合作與支持。

The company continues to advance targeted netback improvement opportunities on conventional and renewable products to bolster profitability, notably completing all pathway approvals for renewable feedstocks and securing a direct off-take of jet fuel produced at the Mobile Refinery. After tendering and negotiating a new off-take agreement for this jet this spring, we commenced supply for a new customer on April 1. The transition has been well managed by the operational and commercial teams. And this is an important milestone for Vertex as it is the first of the finished product contracts to roll off our initial off-take agreements inherited upon the purchase of the refinery.

該公司繼續推進傳統和可再生產品的有針對性的淨收益改善機會，以提高盈利能力，特別是完成可再生原料的所有途徑批准，並確保直接承購移動煉油廠生產的噴氣燃料。在今年春季對該飛機進行招標和談判新的承購協議後，我們於 4 月 1 日開始向新客戶供貨。營運和商業團隊很好地管理了這項過渡。這對 Vertex 來說是一個重要的里程碑，因為它是第一個完成我們在購買煉油廠時繼承的初始承購協議的成品合約。

We expect our margin uplift on these barrels under our new contract to represent a $10 million improvement over the previous agreement. We have additional agreements approaching expiry over the next year, and we'll be following a similar process with those volumes as we did with the jet volumes and expect to deliver increased value for the company as compared with the existing contracts.

我們預計，根據新合同，這些桶的利潤率將比先前的協議提高 1000 萬美元。我們還有其他協議將於明年到期，我們將按照與噴射機數量相同的流程處理這些數量，並預計與現有合約相比，為公司帶來更高的價值。

With that, I'll turn it over to Ben for some closing remarks.

接下來，我將把它交給 Ben 做一些結束語。

Thank you, Doug. Our team is doing a great job of keeping our operations safe, minimizing risk, and delivering incremental results towards our stated goals. As we navigate the second quarter of 2024, our focus is on managing cash flow during this transitional period. We believe this is the best decision at this time for this asset as it is not only expected to curtail and stop losses associated with renewable production, it is also expected to provide additional margin opportunities following successful conversion.

謝謝你，道格。我們的團隊在確保營運安全、最大限度地降低風險並為實現既定目標提供增量成果方面做得非常出色。在我們展望 2024 年第二季時，我們的重點是在此過渡時期管理現金流。我們認為，對於該資產來說，這是目前最好的決定，因為它不僅有望減少和阻止與再生能源生產相關的損失，而且有望在成功轉換後提供額外的利潤機會。

Given the persisting market volatility and crude pricing, which is impacted by a variety of global factors, we will continue to pursue strategic opportunities and financing pathways that support liquidity needs over the near term. We've done a lot of work proactively restructuring the business to reduce cost and capital and set up systems to manage and monitor cash flow effectively, and we will continue these efforts on ongoing basis.

鑑於受多種全球因素影響的持續市場波動和原油定價，我們將繼續尋求支持短期流動性需求的策略機會和融資途徑。我們已經做了很多工作，積極重組業務以降低成本和資本，並建立了有效管理和監控現金流的系統，我們將持續不斷地繼續這些努力。

We have been adamant that our strategic priorities are to increase our cash position, reduce our operating costs, and improve margins. While we're optimistic about the future of renewables over the long term, we feel this decision to optimize the renewable diesel hydrotreater to conventional service is not only prudent, but a necessary step in accomplishing these goals for the remainder of 2024 and into 2025.

我們一直堅信我們的策略重點是增加現金狀況、降低營運成本並提高利潤率。雖然我們對再生能源的長期未來持樂觀態度，但我們認為將再生柴油加氫處理裝置優化為常規服務的決定不僅是謹慎的，而且是在2024 年剩餘時間和2025 年實現這些目標的必要步驟。

Thank you. I'll now turn the call over to the operator for questions.

謝謝。我現在將把電話轉給接線員詢問問題。

(Operator instructions) Noah Kaye, Oppenheimer.

（操作員指示）Noah Kaye，Oppenheimer。

Thanks for taking the questions. Maybe just sort of walk us through what's entailed in doing the conversion of the hydrocracker back. I mean, it was in good shape prior to RD conversion. Just is there anything that we should be particularly aware of around the actual mechanics here? Anything that suggests any kind of risk to getting back to generating what I think you called out would have been materially higher gross profit.

感謝您提出問題。也許只是引導我們完成加氫裂解器的轉換所需的內容。我的意思是，在 RD 轉換之前它的狀況良好。只是這裡的實際機制有什麼我們該特別注意的嗎？任何暗示恢復產生我認為你所呼籲的東西存在任何風險的事情都會導致毛利大幅提高。

Yeah. Thank you, Noah. This is James. Thanks for the question. The pivot we've got to, as Doug described in his opening remarks, we've got to work with our feed suppliers and get all of those out. We've been working that and clear that inventory. And then there are probably two keys. One, of course, is getting the different catalysts in, and that's got to work and we've got to plan on it and then finish the permitting. And then with that, we will go through a full management of change, which we're required to do and make sure we do the engineering and do construction. We think it's a low-risk activity. We have had a small team, but now that we've announced, we've been able to get -- we'll be able to get more collaboration and convert the unit back, and we think it'll be a better unit than it was before.

是的。謝謝你，諾亞。這是詹姆斯。謝謝你的提問。正如道格在開場白中所描述的那樣，我們必須採取的關鍵是，我們必須與我們的飼料供應商合作並解決所有這些問題。我們一直在努力並清理庫存。然後可能有兩個鑰匙。當然，其中之一就是引入不同的催化劑，這必須起作用，我們必須對其進行計劃，然後完成許可。然後，我們將進行全面的變革管理，我們需要這樣做，並確保我們進行工程和施工。我們認為這是一項低風險活動。我們有一個小團隊，但現在我們已經宣布了，我們將能夠獲得更多的協作並將該單位轉換回來，我們認為這將是一個比以前更好的單位那是以前。

Thank you. And just in terms of the timing, any change you can put a finer point on the timeline. And I would expect that this will start to really show up more in 3Q results. But if you could speak to the timetables you're currently planning on.

謝謝。就時間而言，任何改變都可以在時間線上註明。我預計這將開始在第三季的業績中真正體現出來。但如果你能談談你目前計劃的時間表。

Yeah. So our plan is to get the conversion complete in Q3 and show up fully for Q4. That's the current plan. But as I said, there's two pieces I don't have control of, one is the getting the permitting and getting the catalyst, but we have a line on both, and we'll be pursuing both aggressive.

是的。因此，我們的計劃是在第三季完成轉換，並在第四季全面展示。這就是目前的計劃。但正如我所說，有兩件事我無法控制，一是獲得許可，二是獲得催化劑，但我們在這兩方面都有底線，我們將積極追求這兩方面。

Okay, appreciate that. And then just on the hedging, you did undertake some additional hedges here. Can we talk a little bit about hedging going forward beyond what you did in 1Q? Are you going to do additional swaps or have you already done swaps for the second quarter?

好的，謝謝。然後就對沖而言，您確實在這裡進行了一些額外的對沖。我們可以談談您在第一季所做的以外的對沖嗎？您打算進行額外的掉期還是已經在第二季進行了掉期？

Yeah. Thanks, Noah. Doug here. There's -- no, we put no additional positions on since those hedges rolled. Strategically, we would look to repeat, if possible, what we -- our approach from last year. So if we see a late summer run on gasoline cracks into the winter, then we would look to capture some of that and hedge it off. We have no idea whether we'll get that opportunity or not. But that strategically, just so you know what we're looking at, that's how we look at that. And then similar to what we did in this winter, if we see diesel cracks persist at levels that are attractive from above what we expect, then we'll do the same with diesel. So that's -- our strategy would mirror what we did with gasoline in late summer and then what we did with diesel in winter for next year that would be the same outlook.

是的。謝謝，諾亞。道格在這裡。不，自從這些對沖滾動以來，我們沒有增加任何頭寸。從戰略上講，如果可能的話，我們希望重複去年的做法。因此，如果我們看到夏末汽油的消耗一直持續到冬季，那麼我們就會尋求捕獲其中的一些並對其進行對沖。我們不知道我們是否會得到這個機會。但從策略上講，只是為了讓你知道我們在看什麼，這就是我們的看法。然後，與我們今年冬天的做法類似，如果我們看到柴油裂縫持續保持在高於我們預期的有吸引力的水平，那麼我們將對柴油採取同樣的做法。因此，我們的策略將反映我們在夏末對汽油的處理方式，以及我們在明年冬季對柴油的處理方式，這將是相同的前景。

Okay, thanks. Maybe one more. Maybe talk a little bit about the process, where the process sits in and around the strategic alternatives now that the company is making the decision to pause RD operations for the current environment. How you're thinking about the pathway for the business going forward and some of the other options that you mentioned in your prepared remarks.

好的謝謝。也許還有一個。也許可以談談流程，既然公司決定暫停當前環境的研發運營，那麼該流程就位於戰略替代方案之中並圍繞著戰略替代方案。您如何考慮業務的未來發展方向以及您在準備好的發言中提到的一些其他選擇。

Hey, good morning, Noah. This is Ben. Thanks for the question. Obviously, we are still very much in our process with BofA. We've got good outcomes that that we're working through. So nothing to report at the moment, but it's clear to that process and those that are still there what we're doing on the pause and pivot. So we will continue forward with that, and hopefully, we'll bring good information back to the market once we conclude the process.

嘿，早上好，諾亞。這是本。謝謝你的提問。顯然，我們仍在與美國銀行合作。我們正在努力取得良好成果。因此，目前沒有什麼可報告的，但對於該流程和那些仍然存在的流程來說，我們在暫停和轉向方面正在做的事情很清楚。因此，我們將繼續推進這項工作，希望一旦我們完成這個過程，我們就能將良好的資訊帶回市場。

Well, I appreciate all the color. Thanks for taking the questions.

嗯，我欣賞所有的顏色。感謝您提出問題。

Thank you.

謝謝。

Sameer Joshi, Wainwright.

薩米爾喬希，溫賴特。

Yeah, good morning. Thanks for taking my questions. I think I agree, it's a prudent decision of the pause in transition, but just a quick question on the actual operations of the RD. Is every incremental barrel that you're producing at a positive gross margin contribution margin right now? And if not, then does it make sense to completely pause production instead of having some level of production at this facility?

是的，早安。感謝您回答我的問題。我想我同意，這是暫停過渡的謹慎決定，但只是對RD的實際運作提出一個簡單的問題。您現在生產的每一桶增量產品的毛利率貢獻率都是正值嗎？如果不是，那麼完全暫停生產而不是在該工廠進行一定程度的生產是否有意義？

Yeah, thank you. Doug here, I think I follow you, if there's negative contribution margin, why run at all? I think that's effectively the conclusion we came to. So we're running off our existing inventory of feedstocks now. And then preparing the unit for the conversion, as James described from a catalyst perspective. So that's -- we didn't see any reason to persist in those losses. The forward curve on feedstocks is flat, so there's no implied benefit coming in terms of feedstock cost. RINs have collapsed materially from where they were last year, which was already down substantially from the previous year. LCFS has been bouncing a little bit, but it's substantially below levels where it commands production. So when you look at those, they're just -- it doesn't look like there's a combination of many of those to us that would provide positive margins for the next several quarters.

是的，謝謝。道格在這裡，我想我明白你的意思，如果邊際貢獻為負，為什麼還要跑步呢？我認為這實際上就是我們得出的結論。因此，我們現在正在耗盡現有的原料庫存。然後準備用於轉換的裝置，正如詹姆斯從催化劑的角度所描述的那樣。因此，我們認為沒有任何理由繼續承受這些損失。原料的遠期曲線是平的，因此在原料成本方面沒有隱含的好處。RIN 與去年相比已經大幅下降，已經比前一年大幅下降。LCFS 有所反彈，但遠低於其控制生產的水平。因此，當您查看這些內容時，您會發現，對我們來說，這些內容的組合似乎無法為未來幾季提供正的利潤率。

Understood. And just a quick follow-up on Noah's previous question as to what it entails. Just wanted to understand, are there any foreseen or foreseeable issues, hurdles in this transition process like from an engineering point of view or from construction point of view, and what kind of safeguards have you put in place or are you putting in place?

明白了。快速跟進諾亞之前提出的問題，以了解其意義。只是想了解，在這個過渡過程中是否存在任何可預見或可預見的問題、障礙，例如從工程角度或施工角度來看，以及您已經採取或正在採取什麼樣的保障措施？

Thank you. This is James again. No hurdles from an engineering. We're just going to make sure, as safeguards that you described, we will go through full management of change in a process hazard analysis of the unit to make sure that the changes made with RD have been taken into account in this service and make sure that we have a lot of conversions back and making sure all those are in good shape and the changes we made associated with RD would be accounted for as we do the conversion back. And we'll have those, and we'll have a full engineering analysis and make sure that we've done it safely and through a pre-startup safety review.

謝謝。這又是詹姆斯。沒有工程方面的障礙。我們只是要確保，正如您所描述的保障措施，我們將在單位的過程危害分析中對變更進行全面管理，以確保在該服務中考慮到 RD 所做的變更，並做出確保我們有大量的轉換回來，並確保所有這些都處於良好狀態，並且我們所做的與RD 相關的更改將在我們進行轉換回來時考慮在內。我們將擁有這些，我們將進行完整的工程分析，並確保我們已安全完成並通過啟動前安全審查。

Understood. Thanks for that. And the last one on capital preservation or cost savings. Since the integration in 2022, your SG&A has been pretty steady around $40 million on a GAAP basis. Do you foresee or are you planning any further resource optimization or lowering of these costs from a preserving cash point of view?

明白了。感謝那。最後一個是關於資本保值或成本節約。自 2022 年整合以來，按照 GAAP 計算，您的 SG&A 一直穩定在 4000 萬美元左右。您是否預見或計劃從保留現金的角度進一步優化資源或降低這些成本？

Yeah, this is Chris. Good question. So, I mean, we do currently have a company-wide focus on cost reductions along with SG&A expense. One thing you'll note in Q1, you did see a 5% reduction in SG&A year over year. So while I'll say this is probably directionally where we will be, we are continuing to be very focused on reducing SG&A and cost in the business.

是的，這是克里斯。好問題。所以，我的意思是，我們目前確實在全公司範圍內專注於降低成本以及銷售管理費用。您會在第一季注意到一件事，您確實看到 SG&A 年減了 5%。因此，雖然我想說這可能是我們的方向，但我們將繼續非常專注於減少銷售、管理費用和業務成本。

Got it, thanks for that. I'll take other questions offline. Thanks and good luck.

明白了，謝謝你。其他問題我會在線下解答。謝謝，祝你好運。

Eric Stine, Craig-Hallum.

艾瑞克·斯坦，克雷格·哈勒姆。

Good morning, everyone.

大家，早安。

Good morning.

早安.

Hey, so I've been jumping around on calls. I apologize if I missed this. But did you quantify your estimate of what whether it's in Q1 or what it would have been in fiscal 2023 from an EBITDA perspective without the losses from renewable diesel?

嘿，所以我一直在接聽電話。如果我錯過了這一點，我深表歉意。但是，您是否從 EBITDA 的角度量化了第一季的預期或 2023 財年在沒有再生柴油損失的情況下的預期？

Yeah. So we take the loss, you're asking without the losses of renewable diesel?

是的。所以我們承擔損失，你是問沒有再生柴油的損失嗎？

Yeah, without the losses what -- I mean, what should we or -- just curious if you quantified what the incremental EBITDA would be or what you would expect given this action you're taking.

是的，如果沒有損失，我的意思是，我們應該做什麼，或者只是好奇，如果你量化了增量 EBITDA 將會是多少，或者考慮到你正在採取的這一行動，你會期望什麼。

Yeah. So we did a similar exercise, Eric, but mostly around the fuel gross margin approach. And what we did was we looked at the hydrocracker the last time it was in service. We took those yields and applied it to Q1, which provided the benefit and distillates, which would be your gas, diesel, and jet. In addition, it provided the benefit in volumes from eliminating the yield loss that we experience when it's not in service, and that gave us about a $40 million benefit on gross profit -- fuel gross margin.

是的。因此，埃里克，我們做了類似的練習，但主要圍繞燃料毛利率方法。我們所做的是在加氫裂解器上次運行時對其進行了檢查。我們將這些產量應用到第一季度，這提供了效益和餾分，即天然氣、柴油和噴氣機。此外，它還消除了我們在不使用時所經歷的產量損失，從而帶來了產量上的好處，這為我們帶來了約 4000 萬美元的毛利（燃料毛利率）收益。

Got it. And I would assume then you're also taking out the elevated OpEx per barrel for the renewable diesel unit given that, I guess, thinking about how this looks, maybe in fourth quarter, when the RD unit has been converted, direct OpEx per barrel should be dramatically less.

知道了。我假設你還會扣除再生柴油裝置每桶增加的營運支出，因為我想，考慮一下這看起來如何，也許在第四季度，當 RD 裝置已經轉換時，每桶直接營運支出應該會大大減少。

Yes. Your OpEx per barrel is going to be less, you're going to have less variable expenses such as logistics and other items. So yeah, you're going to see some benefit across the board.

是的。每桶的營運支出將會減少，變動費用（例如物流和其他費用）也會減少。所以，是的，您將會看到一些全面的好處。

Got it. And then as we think about this, obviously you had not brought on the full 14,000 barrels per day that you were planning. So we should think about this here. You're roughly adding 8,000 barrels per day when all is said and done. Should we think -- I was unclear -- should we think about kind of a similar mix of finished products? When up and running you also had some commentary about some upgrades to increase VGO output or just upgrade it. So maybe if you could just provide some details, that'd be great.

知道了。然後當我們思考這個問題時，顯然您沒有按照計劃每天生產 14,000 桶石油。所以我們在這裡應該要思考一下。總而言之，您每天大約會增加 8,000 桶石油。我們是否應該考慮——我不清楚——我們是否應該考慮類似的成品組合？當啟動並運行時，您還得到了一些關於一些升級的評論，以增加 VGO 輸出或只是對其進行升級。因此，如果您能提供一些詳細信息，那就太好了。

Yeah. So what you'll see if you go back on this hydrocracker, it was about a 40% to 50% conversion unit and one -- and its shortage, its constraint was hydrogen and stripping ability. So once the finally get the hydrogen unit up and an additional stripper, then we'll see significant upgrade in the hydrocracker itself and see a larger yield of diesel and less VGO like (technical difficulty) it'll go to about a 60%-plus conversion unit versus the 40% to 50% we get today.

是的。所以，如果你回頭看看這個加氫裂解裝置，你會發現它大約是一個轉化率為 40% 到 50% 的裝置，而且它的短缺、限制是氫氣和汽提能力。因此，一旦最終啟動氫氣裝置和額外的汽提器，我們將看到加氫裂解器本身的重大升級，並看到柴油產量更高，VGO 更少（技術難度），其產量將達到約60% -加上轉換單位與我們今天得到的 40% 到 50% 相比。

Okay. So I mean, you're saying you're looking at you'll be at the low 70s barrel per day? I mean --

好的。所以我的意思是，您是說您的產量將達到每天 70 桶的低點？我是說--

But this is specifically hydrocracker, not the crude throughput. We'll hold crude running in the average 75,000 barrels a day when all up and running. That doesn't change.

但這是具體的加氫裂解裝置，而不是原油產量。當一切正常運作時，我們將保持平均每天 75,000 桶原油的運作。這並沒有改變。

Okay, got it. And then last thing, just on the strategic initiatives that have been ongoing with BofA, I mean, I would assume there's a component of the people that maybe you've been talking to that were more interested in the conventional refinery, curious what that -- what this move potentially does in the strategic alternatives or options that you discussed on the call? Does that encompass what you've already been doing or are you taking additional steps?

好，知道了。最後一件事，就美國銀行正在進行的戰略舉措而言，我的意思是，我假設可能與您交談過的人中，有一部分人對傳統煉油廠更感興趣，好奇那是什麼 - - 這一舉措對您在電話會議中討論的策略替代方案或選擇可能產生什麼影響？這是否包含您已經在做的事情，或者您是否正在採取其他措施？

So Eric, the pause and pivot certainly paints good, much better picture on our financials as we work on these strategic alternatives. So it's -- I think everybody sees the current market for renewable diesel. So there's no surprise there. I think it's well received by any alternative party this kind of looking at the business at this point in this process. And really, believe no dissension on this decision or anything there. So when you look at renewable opportunities, they're more long term as this process is unfolding. And then we also have the ability to demonstrate the true profitability asset just under this pivot strategy, taking advantage of the hydrocracker and the feedstocks that we control. So we're really setting a kind of a base of cash flow that we're running this process by. So it allows us time and allows us more optionality and broadens interest in the alternative process that we're running.

因此，埃里克，在我們研究這些策略替代方案時，暫停和轉向無疑為我們的財務狀況描繪了更好的圖景。所以我認為每個人都看到了當前的再生柴油市場。所以這並不奇怪。我認為任何替代方都會很好地接受這種在這個過程中此時審視業務的做法。真的，相信對這個決定或那裡的任何事情都沒有異議。因此，當您關注再生能源機會時，隨著這一過程的展開，它們的前景更為長遠。然後，我們也有能力利用我們控制的加氫裂解裝置和原料，展示這一點戰略下真正的獲利資產。因此，我們實際上是在設定一種現金流基礎，以此來運作這個流程。因此，它為我們提供了時間，讓我們有更多的選擇餘地，並擴大了我們對正在運行的替代流程的興趣。

Okay. Thank you.

好的。謝謝。

Donovan Schafer, Northland Capital Markets.

多諾萬‧謝弗 (Donovan Schafer)，北國資本市場。

Hey, guys, thanks for taking the questions. So the first question I want to ask is for running down the inventory levels for the RD operations. How should we think about or expect that to impact your cash position? So on the one hand, you'll be monetizing what's in inventory and that generates cash without the need to turn around and then buy additional feedstock and replace it. But then on the other hand, I believe there is an inventory facility linked to this that would need to be paid down as well. So does everything just kind of net out or does this -- do you end up coming out ahead or behind a little? Just what do you think the net impact on your cash position will be after running down that inventory?

嘿，夥計們，感謝您提出問題。因此，我想問的第一個問題是如何降低研發業務的庫存水準。我們應該如何看待或預期這會影響您的現金狀況？因此，一方面，您將透過庫存貨幣化並產生現金，而無需週轉然後購買額外的原料並替換它。但另一方面，我相信有一個與此相關的庫存設施也需要支付。那麼，一切都會順利進行嗎？您認為庫存耗盡後對您現金部位的淨影響是什麼？

Yeah, thanks. This is Chris. Good question. Basically, the way we look at it is it's going to be neutral, as you noted, we've got a financing arrangement with the inventory. So as we run that down and clear it, there's not a lot of margin in it today as noted. And then as we clear out of the financing arrangement, we'll get a little bit of cash back on that. But when you offset it against the negative margin, I would view it as neutral.

是的，謝謝。這是克里斯。好問題。基本上，我們看待它的方式是中立的，正如你所指出的，我們已經與庫存達成了融資安排。因此，當我們將其降低並清除時，如前所述，今天並沒有太多餘裕。然後，當我們清除融資安排時，我們將獲得一點現金回饋。但當你用它來抵銷負利潤時，我會認為它是中性的。

Okay, that's helpful. And then with the -- I think Ben responded to an earlier question about the hydrocracker unit saying, it's a 40% to 50% conversion rate from the VGO coming off the primary distillation, converting that to diesel or refined products when it goes through the hydrocracker, and that can be increased to 60%, I believe you said with additional hydrogen -- so I guess, the question is, does this mean the plan is to proceed with the Phase 2 where -- I forget the name of the partner you have there, but that the additional hydrogen that was originally intended to be plumbed into everything to take the hydrocracker up to 14,000 -- from 8,000 to 14,000 barrels, is that still going to happen and then that available hydrogen ends up giving you this improvement on the hydrocracker, is that what's going on?

好的，這很有幫助。然後，我認為 Ben 回答了先前關於加氫裂解裝置的問題，他說，初級蒸餾產生的 VGO 的轉化率為 40% 到 50%，當它經過蒸餾時將其轉化為柴油或精煉產品。裂解器，可以增加到60%，我相信你說用額外的氫氣- 所以我想，問題是，這是否意味著計劃將繼續進行第二階段- 我忘記了合作夥伴的名字你已經在那裡了，但最初打算將額外的氫氣注入到所有東西中，以使加氫裂解裝置達到14,000 桶——從8,000 桶到14,000 桶，這種情況仍然會發生，然後可用的氫氣最終會給你帶來這種改進在加氫裂解器上，這是怎麼回事？

Yes, that's the way to think of it. So that project will continue, and it continues for two reasons. Of course, one is, it helps the hydrocracker and its conversion. But if we ever choose to go back to renewables, we'll need that hydrogen to get full rates.

是的，這就是思考的方式。所以這個計畫將會繼續下去，它繼續下去有兩個原因。當然，一是它有助於加氫裂解裝置及其轉化。但如果我們選擇回歸再生能源，我們將需要氫氣以獲得全額費率。

Okay, great. So that's helpful. And then when you were running the hydrocracker for conventional throughput, before you stopped to convert it over to renewable diesel, I believe you were still, at least up until the end there, you were still getting an olefin feedstock that was coming out of that as part of the byproduct that then would go on to Shell at their petrochemical plant to then make plastics or something with it. Is that something -- do we go back to that? Can you resume selling the olefin feed to Shell? How do I think about in the context of the other part? Because maybe that gets compensated for by the conversion rate for the diesel and so forth. If you're going from 40% to 50% range, up to 60% range, maybe that's making up for the olefin piece. I don't actually quite know how the olefin and what share of hydrocracker, how that fit in, and if that's important, and if you can just turn it back to the way it was, or if you have to find another olefin counterparty. How does that work?

好的，太好了。所以這很有幫助。然後，當您運行加氫裂解器以實現常規產量時，在您停止將其轉化為可再生柴油之前，我相信您仍然，至少直到最後，您仍然獲得從中產生的烯烴原料作為副產品的一部分，然後將其輸送到殼牌的石化工廠，然後用其製造塑膠或其他東西。那是不是──我們要回到那個話題嗎？你們能恢復向殼牌銷售烯烴原料嗎？我如何在另一部分的背景下思考？因為也許這可以透過柴油的轉換率等來補償。如果你要從 40% 到 50% 範圍，直到 60% 範圍，也許這可以彌補烯烴部分。我實際上不太清楚烯烴和加氫裂解裝置的比例如何，它們如何適應，以及這是否重要，以及是否可以將其恢復到原來的狀態，或者是否必須找到另一個烯烴對手方。這是如何運作的？

That is for commercial.

那是為了商業。

Yeah.

是的。

It's Doug here, I'll take that. I mean, there is, I mean, clearly, we will be -- the VGO coming off the unit that isn't converted to finished fuels will be of the previous grade that was sold to Shell or supplied internally when they were running this as a network core olefin feedstock, undetermined at this time whether we can get a value improvement for hydrocrack to VGO in this -- at this grade. It certainly will be as good or better than the previous quality produced. So there's reason to expect that those markets would be available to us again. But at this point, we don't have any indication that that would be a value uplift versus the VGO market that we sell into every day today.

道格在這裡，我來接。我的意思是，我的意思是，很明顯，我們將 - 從未轉換為成品燃料的裝置中出來的 VGO 將是以前的等級，該等級是出售給殼牌或在他們運行該裝置時內部供應的網路核心烯烴原料，目前尚未確定我們是否可以在這個層級獲得氫裂解至VGO 的價值提升。它肯定會與以前生產的品質一樣好或更好。因此，我們有理由期待這些市場將再次向我們開放。但目前，我們沒有任何跡象表明，與我們今天每天銷售的 VGO 市場相比，這會帶來價值提升。

Okay, just so I'm clear, it's like the VGO comes off the primary distillation tower. You've got that VGO, then it's going into the hydrocracker. A certain amount of that, say, we'll get to 60% of that, is going to get turned into much higher margin fuel. The 40% that isn't converted into fuel that comes out, is that just the same as VGO like it kind of went in and came out and there was no change to it, and that is also synonymously or incidentally, also what was called olefin feed before, or is there actually a change to that other 40% and it's like a different quality product, but you have to figure out what to do?

好吧，我就說清楚了，就像 VGO 從初級蒸餾塔中出來一樣。你已經得到了 VGO，然後它就會進入加氫裂解器。其中一定數量，比如說，我們將達到其中的 60%，將轉化為利潤率更高的燃料。40% 沒有轉化成燃料，和 VGO 一樣，進去又出來，沒有任何變化，這也是同義或順便說的，也就是所謂的之前的烯烴進料，或者實際上其他40% 發生了變化，它就像是不同品質的產品，但您必須弄清楚該怎麼做？

It's different. It's slightly better than just straight run VGO. However, we don't -- whether it's indeterminate, if we can get a premium for it, but (inaudible)

這不一樣。它比直接運行的 VGO 稍好一些。然而，我們不知道——無論它是不確定的，我們是否可以獲得溢價，但是（聽不清楚）

Okay. And then if I could squeeze just one more in. Talking about the fourth quarter, will we have -- I guess, first would be by the -- when fourth quarter comes around and we expect it to be running full out with conventional, will we get back to the yield, the refined product or fuel kind of yield jet, diesel, gasoline that we had back in, I don't know, Q2 or Q3 like a year ago, I think it was about 75% or maybe 74%. Does that nudge up a bit with the higher -- will the additional hydrogen capacity beyond by then? Basically just what refined product or high margin product yield should we expect kind of on a go-forward basis in Q4?

好的。然後如果我能再擠進去一個就好了。談到第四季度，我們是否會——我想，首先是——當第四季度到來時，我們預計它將全面用完傳統產品，我們是否會回到產量、精煉產品或我不知道，第第二季或第三季我們使用的噴射機、柴油、汽油等燃料的產量，就像一年前一樣，我認為大約是75% 或可能74%。到那時，額外的氫容量是否會超出更高的水平？基本上，我們預期第四季的精煉產品或高利潤產品產量應該是多少？

Yeah, go back to 2022 and that should be your basis, even though we believe we're going to do better than that because we've made some yield improvements, which were not going to back up on even with this conversion. But that at least gives you a starting point.

是的，回到 2022 年，這應該是你的基礎，儘管我們相信我們會做得更好，因為我們已經做出了一些產量改進，但即使透過這種轉換，這些改進也不會得到支持。但這至少給了你一個起點。

Okay. And I think that's where I got the [74%] from. But I don't have my model in front of me. Is that am I in the ballpark?

好的。我認為這就是我得到 [74%] 的地方。但我面前沒有我的模型。那是我在球場嗎？

Yeah, you're in the ballpark.

是的，你在球場上。

Okay, all right. Thanks, guys. I'll take the rest of my questions offline.

好吧，好吧。多謝你們。剩下的問題我會離線回答。

Saumya Jain, UBS.

Saumya Jain，瑞銀。

Hey, good morning, guys. Can you guys talk a bit about how with market conditions right now, it's part of the reason that we're pivoting from the renewable diesel. How easily would you guys even be able to pivot back should that change? How feasible would that be? Is that something you consider?

嘿，早上好，夥計們。你們能否談談目前的市場狀況，這也是我們轉向再生柴油的部分原因。如果這種情況發生變化，你們能輕鬆扭轉局面嗎？這有多可行？這是你考慮的事情嗎？

Yes, it's a great question. I mean, just as the team has preserved our optionality on this unit going back to conventional, we're doing the same, taking the same engineering approach and operations approach to preserve the optionality to come back into renewables. Obviously, frankly, each time you do it, you get better at it because you've got experience, but also you've continued to close any gaps mechanically that might have arose as you did the work. So we have a natural option, if you would. Every time we come up on a catalyst change, we're going to evaluate the forward market conditions, look at what those yields would produce in terms of margin, and make that decision as we order catalyst and plan the turnaround. So for renewables, that's every year, in conventional service, it's roughly every two years.

是的，這是一個很好的問題。我的意思是，正如團隊保留了我們對該裝置回歸傳統的選擇性一樣，我們也在做同樣的事情，採用相同的工程方法和運營方法來保留返回可再生能源的選擇性。顯然，坦白說，每次你這樣做時，你都會做得更好，因為你有經驗，但你也繼續機械地縮小工作時可能出現的任何差距。因此，如果您願意，我們有一個自然的選擇。每次我們遇到催化劑變化時，我們都會評估遠期市場狀況，看看這些收益率會產生多少利潤，並在訂購催化劑和計劃週轉時做出決定。因此，對於再生能源來說，這是每年一次，在傳統服務中，大約是每兩年一次。

One could certainly make that decision earlier if there was just disproportionate or dislocated margins available for some reason, and you had confidence in your ability to achieve those. But the normal schedule would be just to evaluate this every time we have a catalyst change planned and then use that turnaround as our option point to go one direction or the other.

如果由於某種原因存在不成比例或錯位的利潤，並且您對實現這些目標的能力充滿信心，那麼人們當然可以更早地做出這一決定。但正常的時間表只是在每次我們計劃進行催化劑變更時對此進行評估，然後使用該週轉作為我們朝一個方向或另一個方向前進的選擇點。

Got it. And then I guess on another, on a separate note, would you guys, or have you considered any potential joint venture partners to help with the cash flow in regards to the refinery itself?

知道了。然後我想，在另一個方面，你們會或是否考慮過任何潛在的合資夥伴來幫助煉油廠本身的現金流？

You mean as far as like other intermediators to come in to replace current?

你的意思是像其他中介一樣進來取代目前的？

Yes.

是的。

Yeah. I mean, what we're really focused on right now, the term debt is due within 11 months of basically today. So we're really focused on, number one, as you heard, the strategic financing opportunities as well as a, I guess a refocus on refinancing the term debt at the moment.

是的。我的意思是，我們現在真正關注的是，定期債務基本上是在今天起的 11 個月內到期。因此，正如您所聽到的，我們真正關注的第一件事是策略性融資機會，以及我認為目前重新專注於定期債務再融資。

Got it, thank you.

收到了。

Brian Butler, Stifel.

布萊恩巴特勒，斯蒂菲爾。

Hi, good morning. Thanks for taking my question.

早安.感謝您提出我的問題。

Good morning.

早安.

Good morning.

早安.

I just wanted to start on the going concern disclosure and the 10-Q. Can you maybe provide a little additional color and square that with what we're discussing in the call here and what's behind that analysis? Is it just the term loan coming due in 11 months, or what is the opportunity timeline between for refinancing that term loan?

我只想從持續經營揭露和 10-Q 開始。您能否提供一些額外的顏色和方塊，以配合我們在此處通話中討論的內容以及該分析背後的內容？是指 11 個月內到期的定期貸款，還是為該定期貸款再融資的機會時間表？

Yeah, great question, Brian. So yeah, that is strictly around the term debt coming due within a 12-month window of the filing. So GAAP requires us to disclose that. As noted, we're very focused on a refinancing, and we feel very good about where we're at. We've got 11 months to do that. So that process is underway today.

是的，很好的問題，布萊恩。所以，是的，這嚴格圍繞在提交文件後 12 個月內到期的債務期限。因此，公認會計準則要求我們揭露這一點。如前所述，我們非常專注於再融資，我們對目前的狀況感覺非常好。我們有 11 個月的時間來做到這一點。所以這個過程今天正在進行。

Okay. And then on the conventional, when you think about getting the hydrocracker back to conventional production, can you maybe give at a high level how we should think about gross profit, EBITDA, and maybe sensitivity kind of to the spread as we get to a run rate in 2025 for that conventional business? I mean, how much EBITDA can that generate or/and how sensitive is that to the spread?

好的。然後在傳統方面，當你考慮讓加氫裂解裝置恢復到傳統生產時，你能否在高水平上給出我們應該如何考慮毛利、EBITDA，以及當我們開始運行時對價差的敏感性2025 年該傳統業務的利率是多少？我的意思是，它能產生多少 EBITDA 或/以及它對利差有多敏感？

Yeah, I mean, the best thing to do would be look back at, as James noted, Q4 of '22, look at that yield slate and you basically see that we will produce more gasoline, more diesel and jet and less VGO. As far as exposure to the market and cracks, it's still the same. There's no difference.

是的，我的意思是，最好的方法就是回顧一下，正如詹姆斯指出的，22 年第四季度，看看產量表，你基本上會發現我們將生產更多的汽油、更多的柴油和噴射機，以及更少的VGO。就市場暴露和裂縫而言，仍然是一樣的。沒有什麼差別。

Okay. And then last one on renewable diesel, where does the D4 RIN or the LCF as credit and feedstock costs really need to be for you guys to go back and reconsider starting back renewable diesel production?

好的。最後一個關於再生柴油的問題是，D4 RIN 或 LCF 作為信貸和原料成本真正需要在哪裡，才能讓你們回去重新考慮重新開始再生柴油生產？

Yeah, I mean, I think if you look back historically, we'd need to see a margin environment similar to the margin environment that existed when we made this investment decision, which was, again, if you look at '22 and maybe even first quarter '23, I think, before the curves really collapsed. But again, I think if you looked at those values in on a kind of annual average in 2022, by and large, that would certainly incentivize us to fully evaluate converting back at an upcoming catalyst change if those were the curves we were looking at, that would make that a viable candidate at that time. If you look at the, certainly, the margin environment, in most of '23 and certainly what it's been in '24 thus to date then obviously very unattractive.

是的，我的意思是，我認為如果你回顧歷史，我們需要看到一個類似於我們做出這個投資決定時存在的利潤環境的利潤環境，同樣，如果你看看 22 年甚至可能我認為是23 年第一季度，在曲線真正崩潰之前。但同樣，我認為，如果你以2022 年的年平均值來觀察這些值，總的來說，如果這些是我們正在考慮的曲線，那肯定會激勵我們在即將到來的催化劑變化時全面評估轉換情況，這將使其成為當時可行的候選人。當然，如果你看看 23 年大部分時間以及 24 年迄今為止的利潤環境，那麼顯然非常沒有吸引力。

Okay. And I guess, tied to that, would you have to go through the whole certification pathway again for the D4 the BTC and the credits, is that like another -- would be a whole another group of hurdles to get over?

好的。我想，與此相關的是，您是否必須再次通過 D4、BTC 和積分的整個認證途徑，這是否像另一個一樣——將是另一組需要克服的障礙？

No, we can preserve those. We have a timeframe. We've got certain things we have to do to be able to preserve those administratively, but we'll continue to preserve those in the future as long as we can.

不，我們可以保留這些。我們有一個時間表。為了能夠在管理上保留這些內容，我們必須做一些事情，但我們將在未來盡可能地繼續保留這些內容。

Okay, great. Thanks for taking my questions.

好的，太好了。感謝您回答我的問題。

Thanks.

謝謝。

Jason Gabelman, TD Cowen.

賈森·加貝爾曼，TD·考恩。

Hey, morning. Thanks for taking my questions. I missed some of the calls, so apologies. This has already been discussed, but the offtake agreement with Idemitsu, are there -- that was for the renewable diesel product. Are there any commitments that you'll have to follow through on despite shutting down the renewable diesel production, or is there any cost associated with ending that contract?

嘿，早安。感謝您回答我的問題。我錯過了一些電話，所以很抱歉。這已經被討論過，但與出光的承購協議已經存在——那是可再生柴油產品。儘管關閉了再生柴油生產，您是否仍必須遵守任何承諾，或者終止該合約是否會產生任何費用？

Well, I guess to clarify -- it's Doug here. We don't intend to end that contract. We continue to have a very good relationship with Idemitsu in all regards. So we want that contract to continue should we resume renewable production. So that's our belief is that Idemitsu value that as well. And that's our current indication. So it's more of a pause than a cessation in permanent terms. And that's a fairly long-term contract. So it currently goes beyond our next sort of window when we would evaluate this again.

好吧，我想澄清一下——我是道格。我們不打算終止該合約。我們與出光在各方面都保持著非常良好的關係。因此，如果我們恢復再生能源生產，我們希望該合約繼續有效。所以我們相信出光也重視這一點。這就是我們目前的跡象。因此，這更像是一種暫停，而不是永久的停止。這是一份相當長期的合約。因此，當我們再次評估這一點時，它目前超出了我們的下一個視窗。

There are some operational obligations for both of us in that arrangement that we're working through and dealing with currently. Is there residual costs in our systems on a go-forward basis coming out of this potentially, not definitively, but certainly potentially associated with Idemitsu.

在我們目前正在處理和處理的安排中，我們雙方都有一些營運義務。未來我們的系統中是否會產生剩餘成本，雖然不是明確的，但肯定可能與出光有關。

And then we also have storage capacity in Mobile that's secured specifically to support RD that we believe we have uses for and can trade around those assets and make use of those rents that we're paying on those tanks, but there's a tail on the tank rents, too.

然後，我們還在莫比爾擁有專門用於支援研發的儲存容量，我們相信我們可以使用這些資產，並且可以圍繞這些資產進行交易，並利用我們為這些儲罐支付的租金，但儲罐上有一個尾巴租金也一樣。

Okay. But to be clear, you don't have to go out and buy renewable diesel in the open market to fulfill some sort of contractual obligation moving forward?

好的。但需要明確的是，您不必出去在公開市場上購買再生柴油來履行某種未來的合約義務？

No, the Idemitsu is a production offtake agreement, not a guaranteed production agreement. So it flexes with our production.

不，出光是生產承購協議，而不是保證生產協議。所以它會隨著我們的生產而改變。

Okay, thanks. And then my other one was just on maybe some of the cash benefits from ending the renewable diesel service. Can you provide a working capital benefit that you expect to get from running down that feedstock? And then is there any offset from building more conventional-related inventories?

好的謝謝。然後我的另一件事可能只是結束再生柴油服務帶來的一些現金好處。您能否提供您期望從消耗該原料中獲得的營運資金收益？那麼建立更多與傳統相關的庫存是否會產生任何抵銷作用？

Yeah. I mean, from the RD perspective, I don't see a big benefit in working capital as we look at running this down. On the conventional, as you know, we've got the financing agreement for our inventory flowing through. So there shouldn't be a big change in working capital as we transition.

是的。我的意思是，從研發的角度來看，當我們考慮減少營運資金時，我認為營運資金並沒有太大的好處。如您所知，按照慣例，我們已經為我們的庫存流通達成了融資協議。因此，隨著我們的轉型，營運資金不應該有太大變化。

Okay, great. Yeah, sorry.

好的，太好了。是的，抱歉。

But -- say the only difference is the refined products will go up a bit because we're making more of them and some of those move via vessels so you'll see builds as you build inventory to load the ship. But similar to what we do with jet today. So that'd be the only material difference that you'll see in the inventory side.

但是——說唯一的區別是精煉產品會上漲一點，因為我們正在生產更多的產品，其中一些是透過船隻運輸的，所以當你建立庫存以裝載船舶時，你會看到建造。但與我們今天對噴射機所做的類似。因此，這將是您在庫存方面看到的唯一實質差異。

Got it, great. Thanks for the answers.

明白了，太好了。感謝您的回答。

As of right now, we don't have any pending questions. I'd now like to hand back over to Mr. Ben Cowart, CEO. Thank you.

截至目前，我們沒有任何懸而未決的問題。現在我想把時間交還給執行長本·考瓦特先生。謝謝。

Thank you, operator. And thank you, everyone, for joining the call today. We are very positive about this initiative and the pause and pivot. We really believe it's the right time and place to be able to make that move. And I just want to thank our team and our leadership team as well, folks at the site, our legacy business, all the good work they did over the quarter. So we're looking forward to really putting cash flow back on the business where it should be and, really, gives us time to work on our renewable strategy. And there's lots of opportunities long term that we believe our asset is going to be of high interest. So we're going to take our time here with our conventional business and put us back to good cash flow and move the business forward. So having the flexibility around the asset and the ability to do this is very important and to the credit of our people to be able to put us in this position. It really gives us a big step forward. So thank you, everybody, and really appreciate again making the call. And we look forward to some future communications as we go forward.

謝謝你，接線生。感謝大家今天加入電話會議。我們對這項措施以及暫停和轉向非常積極。我們確實相信現在是採取這項行動的正確時間和地點。我只想感謝我們的團隊和領導團隊、現場人員、我們的遺留業務以及他們在本季度所做的所有出色工作。因此，我們期待真正將現金流重新投入到業務應有的位置，並且確實讓我們有時間制定再生能源策略。從長遠來看，我們相信我們的資產將有很多機會，將會引起人們的高度興趣。因此，我們將花時間處理我們的傳統業務，讓我們恢復良好的現金流並推動業務向前發展。因此，擁有資產方面的靈活性以及做到這一點的能力非常重要，並且能夠讓我們處於這個位置，這對我們的員工來說是值得讚揚的。這確實讓我們向前邁出了一大步。謝謝大家，非常感謝再次打電話。我們期待著未來的一些溝通。

Thank you so much for attending today's conference call. Have a wonderful day. You may now disconnect.

非常感謝您參加今天的電話會議。祝你有美好的一天。您現在可以斷開連線。